How much Morrisons’ farmer milk brand will earn producers

Arla members could get as little at 79p/day extra from Morrisons’ new milk brand, which the supermarket had said would support struggling dairy farmers. 

But they could also get a lot less. 

Farmers Weekly has done some number crunching.

We have based our calculations on the retailer selling 10% of its total liquid milk under the new brand.

This relies on customers choosing to buy a more expensive bottle of milk. 

See also: Detail lacking in Asda’s 28p/litre milk commitment

We estimate that as a result, each Arla member would on average receive:

• £285.85/year
• £23.82/month
• £0.79/day

The supermarket announced on Tuesday 11 August it would launch “Milk for Farmers” – a milk brand 10p/litre more expensive than its usual offering.

The premium would be paid to processor Arla, to be passed back to farmers. 

However, the scheme has come under heavy criticism from farmers because it relies on shoppers choosing to buy a more expensive product.

Furthermore the premium will be divided among Arla’s 13,500 farmer members spread across Europe. 

How we crunched the numbers:

• We drink about 7.197billion litres of liquid milk a year.

(UK dairy farmers produced 14.394bn litres in 2014-15 and nationally, we consume 50% of our milk as liquid milk – both AHDB Dairy figures).

About 75% of this is sold through retailers according to AHDB Dairy. 

• This means about 5.398bn litres/year passes through supermarkets and other retailers.

Morrisons has an 11% share of the grocery market (Kantar World Panel latest figures for 12 weeks to 19 July 2015).

• So by our calculations Morrisons must sell about 593.75m litres/year. 

(11% of total liquid milk retailed in UK)

Arla says it supplies Morrisons with about 65% of its liquid milk.

• So we estimate that Arla supplies Morrisons with about 385.94m litres/year.

Only 18% of consumers said they would be willing to pay more than 20p extra for a four-pint bottle of milk. But the Morrisons move would add 23p to a 4-pint bottle (survey carried out by ADHB Dairy).

As the survey points out, what people said they will do and what they actually do at the till are two different things.

• So if 10% of shoppers bought Morrisons’ “Milk for Farmers” that would equate to 38.59m litres/year.

10p extra on every one of those litres equals £3.86m/year a year going to Arla members.

Arla has said it will divide this between it 13,500 members.

This equals 

£285.85 for an average Arla farmer a year

£23.82/month

£0.79/day

Farmers Weekly asked Morrisons about its new brand. These are the answers, word for word, it gave.